Raj Gupta is the 2nd generation leader of Environmental Systems Design (or ESD now Stantec) and spent his entire career working in the business, becoming CEO in 2011 and Executive Chairman in 2017. Last year, the company was sold to a strategic buyer, Stantec, an outcome that provided a thoughtful succession solution and created value for the Gupta family.
Author Capital’s Duane Jackson, served as an advisor through that process as a member of ESD’s Advisory Board. In this interview, Raj and Duane reflect on the process, which represents one of the most difficult decisions family business owners and founders can make.
Duane Jackson
It’s an honor to have this conversation with you and to reflect upon your family’s history and legacy with ESD. What was your earliest memory of the family business and when did you decide that you wanted to join?
Raj Gupta
My dad started the business in 1967 when I was only six years old. Growing up, I heard about it at the dinner table. He’d come home and I would just listen to the things he and my mom were talking about. I always looked up to both of my parents, so I was intrigued and that’s how I learned about it.
However, my dad said “you’ll be set for life if you become a doctor.” But I wasn’t interested in that. I knew there was an opportunity to go into the family business.
Duane Jackson
One of the things that so many second generation family business owners face is operating in the shadows of the first generation. How did you go about establishing credibility when you joined the business?
Raj Gupta
I did struggle with it a bit. Am I measuring up? Am I doing a good job? If I had to do it again, it would be really good advice for people who are going to go into a family business to go work somewhere else first, whether it’s in the same industry or something else.
But over time, I gained confidence. We were big enough that I wasn’t working with my father every single day or in his shadow. So I was able to create my own identity and build my own relationships.
Duane Jackson
In the time you overlapped, were there any irreplaceable lessons that you learned from him and adopted?
Raj Gupta
Oh, yeah. He was a self-made man. He eloped with my mother and came to the US with no money and they just worked hard. He talked about how they got lucky along the way because they had mentors who helped them. Both of my parents are remarkable.
What I learned from him on the business side was to take a long-term view. Many times we see people treat business as a transaction or an exchange—I’m going to give you this, you’re going to give me that and maybe we’ll meet again. He always looked long-term. It was all about relationships. That’s something that stuck with me.
The other thing is, he was able to keep things simple. For example, he would always keep three payrolls in the bank. If there was more than three payrolls, we could make a distribution. If there wasn’t, then we’d have to make some hard decisions at the office.
He was very good at keeping things simple. So thinking long term and nurturing those relationships, that’s something that’s really stuck with me.
Duane Jackson
If you think about your leadership of the company, what would you have done differently?
Raj Gupta
One thing I could have done better is dealing with non-performers. I would always talk about ESD as a family—my ESD family. I spent almost two thirds of my life at the company, spending more time with them than with my real family. It wasn’t just rhetoric. I saw them as part of my family. It tore me apart if I had to part ways with somebody. But in business, sometimes you have to make tough decisions.
In retrospect, I could have acted sooner on some of these difficult personnel decisions. Sometimes my brain would be telling me something and my heart would be saying something else.
Duane Jackson
You can’t refute the end result and I appreciate that you ran the business with heart. Often it can be isolating to run a family business. Who did you turn to for camaraderie along the way?
Raj Gupta
My father and my siblings were very supportive. We would talk about the business and what was going on. When it came time to evaluate the sale, my brother David’s experience buying and selling his business was invaluable.
I also have a YPO forum that’s been together for over 20 years, so they have been a great help.
And the advisory board that you were part of. I was smart enough to know what I didn’t know and surrounded myself with people on the advisory board who brought expertise that we really needed at that time. Then we would change out the board members periodically as the needs of the business changed.
What’s so important though is that you have to take responsibility for your own education, continuously learning.
Duane Jackson
You didn’t wake up one day and say, now it’s time for me to sell the business. What was that process like and how did you come to terms that it was indeed time to think about succession?
Raj Gupta
There was a long process. I learned from observing firms that did it well and firms that didn’t. For the ones that did succession planning well, it was a continuous process. Succession planning should be continuous.
First, we did it from the leadership side. Over ten years ago, I gave up the day-to-day operations. That’s because we had groomed people. We were continuously trying to do get that next generation of management in place, and we accomplished that.
Then, when it became time to look at ownership transition, we looked at various options and decided to go out to the market. One of the main reasons we did that is that you have to look at the competitive environment. In our industry, it’s becoming nationalized and globalized. Companies are either small niche companies of 30 to 40 people or they’re behemoths. The ones in the middle are getting marginalized. At 300 people, we were in the middle.
So we had to decide what we wanted to do. I’m very proud about how over the last 10-15 years, we transitioned the company to one that is very specialized. We can export our knowledge globally, but we needed a bigger platform. That was also part of the criteria.
We were very fortunate. We went out with a process—and it wasn’t just about the money. We had several different opportunities. I was gratified when Stantec came along because they provide that platform and offered upside for our employees. That was very important to me. I wanted to make sure they had room to grow in a large organization. And culturally, that is really important. Our mission is to improve society through the built environment. Stantec does that on a grand scale. For those reasons, it felt right and we were able to get the deal done last year.
Duane Jackson
What advice do you have for other family business owners at a similar inflection point?
Raj Gupta
It’s a very emotional decision. So, having a good therapist [chuckles] would be a good thing because it is. I struggled with that for so long because your identity can be the business—rightly or wrongly.
Try to separate the emotional from the business side of things and surround yourself with people who can help you do that. But then you have to take a candid look. We talked about the competitiveness of ESD and what we had to do. A lot of companies don’t realize that, internally and externally, the environment’s changed. They’ve reached this inflection point where—instead of trying to either reinvent themselves or adapt—they just ride it down to where they no longer exist.
That’s really important, and why it’s nice to have trusted advisers. They can help you identify your blind spots and think rationally.
Duane Jackson
How did you go about curating your advisory board and the people that you actually trusted?
Raj Gupta
Over 35-40 years, you start to develop a network. I wanted to find people I trusted, but not the ones who were just going to agree with everything I said. I wanted the tough love. That was a criteria.
Then I had to see what the biggest challenges we were going to face in the next three years were and where the gaps were in trying to figure things out. I can go back through all of our board members and talk about why at that time it made sense to have them. That’s how I looked at it.
Duane Jackson
Raj, thank you and congrats to you and your family on the success that you’ve had and what’s to come.
The conversation has been edited for brevity and clarity. Watch the full video above for additional insights.
